Airbnb Loses a Fight in New York as Legislature Passes Strict Advertising Law

Jason Clampet, Skift

- Jun 17, 2016 5:20 pm

Skift Take

Both Airbnb and New York City have missed out on a real opportunity to set precedents for the business. If Airbnb would bend a bit, and if New York leaders didn’t think it was pure evil we could have seen a solution similar to what then-Mayor Bloomberg’s was able to do with smart rules for Uber and e-hailing. More fighting on the horizon.

— Jason Clampet

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New York State legislators passed a bill today that will heavily fine hosts on Airbnb and other short-term rental site for allowing listings by hosts of rentals that violate the state’s short-term rental laws.

The bill [embedded below] first passed the State Assembly and then moved quickly through the State Senate in the closing days of session. It awaits the governor’s signature. The new law seeks to restrict the advertising of the vast majority of full-unit rentals for less than 30 days in New York City. This type of rental is already illegal under the state’s short-term dwelling law, but Airbnb and its peers have not helped state or city officials limit rentals that violate the law. These rentals make up a majority of Airbnb’s inventory, multiple studies and Airbnb data have confirmed.

Earlier today Airbnb published a statement on its political action blog urging state legislators not to move on the bill. “We’ve asked New York leaders to change this law and ensure we can deliver tens of millions of dollars in new tax revenue,” the statement reads. “Sadly, New York is going backwards and is instead considering wrongheaded legislation that would punish middle class families who depend on home sharing to pay the bills and stay in their homes.”

Following the vote, Josh Meltzer, Head of New York Public Policy for Airbnb said, “It’s disappointing — but not surprising — to see politicians in Albany cut a last minute deal with the hotel industry that will put 30,000 New Yorkers at at greater risk of bankruptcy, eviction or foreclosure. Let’s be clear: this is a bad proposal that will make it harder for thousands of New Yorkers to pay the bills.”

The Impact

The new law has a penalty of up to $1,000 for the first violation, $5,000 for the second violation, and $7,500 for the third and subsequent violations.

“This bill, once it’s signed into law, will send a strong message that we prioritize hardworking New York families and affordable housing,” said Assemblymember Linda B. Rosenthal, a sponsor of the bill, in a statement. “[It will] give law enforcement the tools they need to crack down on illegal hotels that destabilize communities and deprive us of precious units of affordable housing.”

The Hotel Association of New York City, which was in support of the bill, issued a statement from its chairman Vijay Dandapani through the Share Better group: “This smart and innovative legislation will allow law enforcement agencies to better target, track, and penalize lawbreakers, while also protecting one of New York’s most vital economic contributors – the hotel and hospitality industry.”

In New York City, the responsibility to collect the fines will be given to the Mayor’s Office of Special Enforcement rather than a state agency. This office has grown in recent years as current mayor Bill de Blasio attempted to find more violations of the short-term housing law. Cities under a million residents will get help from the state to enforce the law

This is the second political battle in two few weeks that Airbnb has lost. Last week San Francisco’s Board of Supervisors voted to add additional enforcement procedures to a city law that Airbnb helped write, but hasn’t turned out to be enforceable as enacted

In both San Francisco and New York cases, there will likely be challenges on multiple grounds from Airbnb. The most likely move will be to argue that Airbnb is not responsible for the listings under protections in the Communications Decency Act that give websites wide protection from objectionable content that users post.

Photo Credit: Brian Chesky, Chief Executive Officer of Airbnb smiles during a session at the annual meeting of the World Economic Forum (WEF) in Davos. His company has lost two political battles in two weeks in two of its most important markets. Denis Balibouse / Reuters